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Wednesday, 01 August 2007 00:00

Two bite the dust

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On one hand, Avram Friedman couldn’t believe Duke Power’s announcement two years ago that it wanted to build a twin-unit coal plant near Hickory. Who builds coal plants anymore, he thought.

“It’s out of the question,” said Friedman, director of the Canary Coalition, a statewide clean air advocacy group based in Sylva.

On the other hand, Friedman could believe it. All over the country, utility giants are gearing up for an unprecedented round of power plant building, and coal was topping the list. Duke’s plans were among 159 new coal plants on the drawing board nationwide last year.

But before Duke could start building, it had to get permission from the N.C. Public Utility Commission, one of the conditions of being a regulated monopoly. Environmental groups across Western North Carolina rallied troops to oppose the permit.

“There is strong resistance to building new coal plants,” said Stephen Smith, executive director Southern Alliance for Clean Energy. “It’s a technology that will lead to worse global warming, and that is something the (utility commission) should take into consideration.”

In reality, though, it’s not something they take into consideration. There’s a two-part litmus test for approving new plants in North Carolina: whether the energy is needed and whether the plant being proposed is the cheapest way to get there. Global warming, acid rain, mountain-top removal — all by-products of coal — aren’t part of the equation.

Strictly speaking, the litmus test includes hard costs only: bricks, mortar, labor to build and operate, and cost of the fuel, be it coal or uranium in the case of nuclear. Public health costs get much trickier and more subjective to weigh, said James McLawhorn, director of electric division with the utility commission.

“They don’t say ‘Well, this plant will cause 3,000 people to go the hospital with asthma and that’s a cost to society.’ I’ve never seen them put a number on that,” McLawhorn said.

Friedman has long been perturbed by the utility commission’s formula. Hoping to fix it, he spearheaded state legislation to do just that. Instead of weighing hard costs only, the bill called for the utility commission to weigh a host of environmental and public health costs.

“Up until now when they are comparing coal versus solar for instance, they say it costs so much to build a solar plant per kilowatt versus so much to build coal. Coal is always cheaper,” Friedman said. “But you are ignoring mountain-top removal. You are ignoring global warming. You are ignoring asthma rates. To the utility commission, those are external costs. But to everybody else in the world, those are just costs.”

A bill calling for a new formula gained massive public support, Friedman said. But par for the course it seems, the bill got watered down in the halls of the state legislature. The new version — vastly diluted, according to Friedman — merely calls for a study of the issue by the utility commission.

What costs should and shouldn’t be included in a new formula for weighing new forms of energy will be left up to the utility commission to decide, and Friedman doesn’t trust their judgment. Nonetheless, Friedman is still supporting the bill, hoping it will lead to a better formula one day.

 

Part victory

In the meantime, Duke’s permit for the twin-unit coal plant in Hickory went before the utility commission. It failed the litmus test, partly anyway. The utility commission ruled in the spring only one of the two units was necessary at the moment and approved half of Duke’s plan — namely 800 megawatts instead of 1,600. It’s still enough to power between 400,000 and 600,000 homes. A revelation six months earlier that the plant would cost $3 billion instead of the initial estimate of $2 billion could have also played a role in the decision.

It was part victory and part defeat for the environmentalists.

“Certainly we’re glad that the utility commission killed one of the plants,” Smith said. But “we are very disappointed they let one get through.”

Duke’s not the only power company to have their plans for new coal plants derailed. Despite the large number of coal plants on the drawing board by utilities, more than two dozen have been officially denied in the past year and others are facing uphill battles.

“They are dropping like flies,” Smith said.

In Florida, like here, the state utility commission has denied permits for coal plants. As the standard for emission controls rise, the cost of building coal plants is no longer the most cost effective way of meeting energy demand, contributing to the denial of permits. On another front, environmental groups have challenged the construction of new coal plants in court, suing state agencies for granting permits. In other cases, coal plants have been thwarted by Wall Street. Investors seem lukewarm to the idea of putting billions into an antiquated energy technology.

The anti-coal trend is so prevalent the headline “New Power Plants Fueled by Coal Are Put on Hold” appeared on the front page of the Wall Street Journal last week. Although a nuclear plant hasn’t been built in America in more than 20 years, the backlash against global warming but reluctance to trim energy demands is giving new traction to nuclear.

“Nuclear is resurging around the country,” said Paige Sheehan, spokesperson for Duke Energy.

Duke has a nuclear plant in the planning stages in South Carolina. Nuclear takes a decade or more to bring to fruition. Duke needs new sources of electricity before then, thus the proposed coal plant in Hickory, Sheehan said.

“We need a chunk of energy by 2011,” Sheehan said. “The short-term plan is to go with coal and natural gas and renewables and efficiency, and long term go with nuclear,” Sheehan said.

 

And part defeat

While Duke got the green light for one of its coal units from the utility commission, it still needs an air pollution permit. The permit was pending when the utility commission decision was handed down. Duke promptly pulled its air permit application, giving hope to environmental groups.

“A number of us felt like when one of the plants got killed, they wouldn’t build the second one because it is not as cost effective,” Smith said. “The economics of coal is really causing Duke to have to think twice.”

Smith appears to be overly optimistic, however. Duke Energy has no intention of throwing in the towel on the portion of the plant the state approved, according to Sheehan.

“We absolutely need that 800 megawatts,” Sheehan said.

Duke withdrew its air application because it wanted to use different emissions technology than it originally proposed, said Sheehan. Duke resubmitted an updated application last month. A public hearing on the permit has not yet been scheduled.

Duke is doing several things to help clean the air in exchange for getting the new coal unit approved. Duke will shut down 200 megawatts of electricity produced by older coal units in the Hickory area that don’t have modern pollution controls on them — trading dirtier coal for cleaner coal. It has also pledged to spend $35 million a year encouraging energy conservation among households as a condition of the coal plant permit, Sheehan said.

 

Trying again

While fighting Duke’s coal plant on one front, environmental groups were also taking on Progress Energy’s plans to build an oil burning power plant in Buncombe County. The plan never got to the state level, however. Instead, it was killed by the Woodfin city council, which had zoning power over the property where Progress wanted to build the plant.

“It stunned (Progress Energy) there would be this type of community reaction,” Friedman said. “People became imbued with this new sense that, ‘Wow, we really do have power.’”

Shortly after the defeat earlier this summer, Progress Energy launched a community energy advisory council for WNC.

“One thing Woodfin helped us to realize is these are very complicated issues,” said Ken Maxwell, spokesperson for Progress in Asheville. “You cannot communicate and explain effectively in sound bites or public hearings. We realized we have got to better engage the community further out in front.”

Maxwell said Progress wants to hear from the community, but also wants the community to hear from it.

“We want to make sure we are doing a good job of hearing the desires of the community and get that input into the decision process,” Maxwell said. “We also hope the community can learn more about the obligations and responsibilities we have.”

Namely, how do people expect Progress to supply energy if it can’t build new plants? As a regulated monopoly, Progress is beholden to meet energy demand, whatever that may be, Maxwell said.

Friedman is skeptical of the motives behind the advisory council.

“From my perspective, it’s mission is to green-wash their desire to build a new power plant,” Friedman said.

Maxwell said Progress is under the gun to meet energy demand. Currently, Progress buys a block of power from an out-of-state utility to supplement electricity for its WNC customers. The contract for that block of power is up in 2009, and Progress either can’t or won’t renew the contract. It is proprietary information whether Progress doesn’t want to pay the cost of buying the power anymore, or whether the power is simply no longer for sale.

Either way, building a new plant is not the solution, Friedman said.

“We feel that it is feeding into the same paradigm that we need to change. People cannot continue using the same amount of energy or more,” Friedman said.

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